|TORONTO, Dec. 13, 2010 (Canada NewsWire via COMTEX News Network) -- |
Priszm Income Fund (TSX: QSR.UN) ("Priszm" or the "Company") reported today that the Company has executed an asset purchase agreement to sell its restaurants in Ontario and British Columbia to 7716443 Canada Inc., an entity controlled by a current European franchisee of Yum! Restaurants International.
The agreement was reached after a thorough process to identify, solicit and review potential arrangements to sell various combinations of Priszm's restaurant assets in light of Priszm's franchise upgrade requirements and liquidity needs. The agreement encompasses the sale of all 232 of Priszm's operating restaurants in Ontario and BC for an aggregate purchase price of approximately $46.4 million before customary purchase price adjustments including a current asset adjustment. Pre-closing current liabilities of the restaurants will remain with Priszm. Aside from customary closing conditions, the proposed transaction is subject to satisfactory due diligence and financing by the purchaser to be completed by January 15, 2011, adequate landlord and material contract consents, any approvals as required by law and by the Company's governing documents, and consent to the transaction by both Yum! Restaurants International and Priszm's senior debt holder. Although there is no guarantee that the required approvals will be obtained or that the conditions will be satisfied, the transaction is scheduled to close on February 28, 2011.
Priszm also announced today that it has reached an interim agreement with its franchisor, Yum! Restaurants International with regard to the franchise agreements for 70 restaurants that were set to expire on December 10, 2010. The franchise agreements for the 70 restaurants have been extended to January 15, 2011 and include 24 restaurants that are part of the proposed sale transaction. In an effort to conserve cash as the company prepares for the traditional KFC sales decline during the winter season, Priszm withheld its continuing fee that was payable to the franchisor on December 7, 2010, as well as its debt interest which was payable to its senior debt lender on December 10, 2010. The franchisor has provided the Company an extension on the unpaid continuing fee until January 15, 2011. Interest will accrue on the unpaid fee beginning from December 7, 2010. In addition the franchisor has agreed to consider further extensions of both the franchise agreements and the unpaid continuing fee if due diligence and financing conditions contained in the asset purchase agreement are satisfied on or before January 15, 2011. Priszm is also in the process of obtaining a forbearance from its senior debt lender relating to the debt interest which was payable to its senior debt lender on December 10, 2010.
The Company remains in active discussions with both its franchisor and the senior debt lender with respect to both short term liquidity issues as well as long term refinancing. There can be no assurance on any resolution that will result from these discussions however the parties are working towards a satisfactory solution.
About Priszm Income Fund Priszm Income Fund (TSX: QSR.UN) holds approximately a 60 per cent interest in Priszm Limited Partnership, which owns and operates more than 400 quick service restaurants in seven provinces across Canada. The KFC, Taco Bell and Pizza Hut restaurants under Priszm serve more than one million customers a week and employ approximately 7,300 people. Approximately 100 locations are multi-branded, combining two or more of the Fund's restaurant concepts.
To find out more about Priszm Income Fund (TSX: QSR.UN), visit our website at http://www.priszm.com.
Forward-Looking Statements Certain information in this document may constitute forward-looking statements within the meaning of securities laws that involve known and unknown risks, uncertainties, future expectations and other factors with respect to industry sector performance, business plans, activities, trends and events anticipated by the Priszm Income Fund (the "Company") and which may cause the Company's future performance and results to be materially different from those implied by the forward-looking information. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," or the negative of these terms or other comparable terminology concerning matters that are not historical facts. Forward-looking information is based on certain factors and assumptions regarding, among other things, the number of restaurants, the renewal of the franchise agreements, ability to meet capital expenditure requirements, the industry sector performance, business plans, activities, success of refinancing on commercially viable terms, trends and events anticipated by the Company. Although the Company believes that the assumptions underlying such statements are reasonable, any of the assumptions may prove to be inaccurate and, as a result, the forward-looking information may prove to be incorrect. The forward-looking information, assumptions and statements reflect the views of the Company's management with respect to future events and outcomes as of the date of this document and there should be no expectation that such information will be updated, revised and/or supplemented whether as a result of new information, changing circumstances, future events or other cause. Actual events or outcomes may be materially different and cause the performance of the Company to differ materially from any forward-looking statement.
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SOURCE: Priszm Income Fund
SOURCE: KIT Limited Partnership
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